General Fund and Road Fund Revenue Reported for FY22
FRANKFURT, Ky. — The Office of the State Budget Manager reported that Kentucky’s General Fund revenue for fiscal year 2022 grew at the highest rate in 31 years, 14.6 percent from last year.
General Fund income totaled $14.7 billion, exceeding the budget estimate of $945.4 million. The final amount of the budget surplus will be known once the expenditure accounting records are completed later this month. Revenue from the Road Fund totaled $1.67 billion, or 2.0% over last year, just below the budgeted estimate.
June General Fund revenue growth of 13.0% punctuated a second consecutive year of double-digit revenue growth and higher-than-expected revenue. “The 14.6% growth rate recorded in FY22 exceeded the 10.9% growth rate in FY21, the two highest growth years since FY91 , the first year of tax increases enacted in 1990. The June revenue growth pattern was a microcosm of FY22, highlighted by strong growth in all three major revenue accounts.
Personal income tax, business tax and sales tax all rose by double digits in June and throughout FY22. Of the three, perhaps the most impressive gains came from the personal income tax, which increased 17.6% or more than $900 million in FY22.
Wage and employment growth bolstered the withholding component of personal income tax, while stronger profitability and higher taxable income propelled tax returns and net returns . Personal income tax growth rate of 17.6% in FY22 marks the strongest growth since 1991 and the strongest growth in Kentucky’s recorded history in a fiscal year where income tax has not experienced a rate increase.
The General Fund’s revenue surplus of $945.4 million is the second highest year on record, surpassed only by last year’s revenue surplus of $1.1 billion.
Quarterly revenue was strong throughout the year, posting double-digit growth in three of the four quarters. The growth rates for the four quarters were 20.0%, 12.3%, 9.0% and 16.9%.
Sales and use taxes:tax revenue increased 11.0%, or $501.9 million, from a very strong growth rate of 12.0% in FY21. throughout the year were robust with double-digit growth rates in eight of the twelve months. The quarterly growth rates were 9.9%, 16.8%, 14.3% and 4.5%. The continued strength of the sales tax in FY22 demonstrates the continued purchasing power of Kentucky households, as significant growth has occurred without the issuance of broad-based federal stimulus payments.Sales and use
Personal income tax:Personal income tax revenue rose sharply during the year and posted the largest dollar increase from FY21 levels. Revenue rose 17.6% or 903 .8 million. Percentage growth hit a 30-year high, while absolute dollar growth was the highest on record. All components of tax, withholding tax, declarations, net balances on declarations and fiduciary are up sharply. The growth rates for the four quarters were 6.5%, 11.0%, 17.3% and 30.5%.
Professional taxes:Combined corporate income and limited liability entity (LLET) tax recoveries increased 34.4%, or $303.8 million, from a year ago. Like sales tax, business taxes experienced a second consecutive year of unusually high growth rates with a growth rate of 38.1% last year. The quarterly tax growth rates in FY22 were 76.0%, 22.9%, 30.1% and 24.9%.
Departure taxes on coal:Coal severance tax revenue was the highest since fiscal 2019 with collections of $70.7 million, an increase of 26.0%, as energy prices increased, particularly at the end of the exercise. The quarterly growth rates for this account were 6.1%, 4.6%, 40.4% and 55.4%.
Tobacco taxes:Cigarette tax was the only major account to drop in FY22, down $25.5 million, or 7.3%. Collections were lower in all four quarters. The quarterly variations compared to last year were -4.4%, -11.8%, -4.3% and -7.9%.
Property taxes:Property tax revenue increased 3.0%, or $21.4 million, in FY22. Quarterly percentage changes for the four quarters were 16.5%, 5.3 %, -2.3% and -5.8%.
Lottery and other income:Kentucky Lottery Corporation collections that were paid into the general fund increased by $5.9 million, or 2.0% for the year just ended. An additional $52.3 million in lottery dividends was received but diverted to a separate account, as required by the budget bill. The “other” category, which includes multiple taxes and fees such as alcohol, estates, insurance premiums, telecommunications, other mining taxes and regulations, rose 17.7%, or 149.3 millions of dollars. The high growth rate is the result of a $225 million legal settlement offset by the repeal of the bank franchise tax.
For the year, the three largest tax categories exceeded the official revenue estimate by substantial amounts, led by personal income tax revenue at $622.8 million, or $11.5 %. Sales and use tax revenue exceeded the estimate by 2.3%, or $112.2 million. Major business tax revenues exceeded the forecast level by $216.1 million.
Road Fund revenues for FY22 totaled $1.67 billion, an increase of 2.0% over the prior year. Total revenue was $33.0 million higher than FY21 as all but two major accounts increased. Collections showed modest growth in the first three quarters of the year before turning negative in the last three months of the year. The growth rates for the four quarters were 3.5%, 2.8%, 5.2% and -2.6%.
Fuel tax revenues rose 3.5% despite higher gasoline prices and were robust in each of the first three quarters before falling in the last quarter in response to faster fuel price increases. gasoline. The quarterly fuel tax growth rates were 4.9%, 4.7%, 5.7% and -0.8%.
Motor vehicle use tax collections from vehicle sales reached a record high of $629.1 million, surpassing last year’s high of $620.9 million, and increased by 1.3%. The growth rates for the four quarters were 3.8%, 2.3%, 7.8% and -6.7%.
Receipts from motor vehicle registration fell by $1.8 million, while receipts from motor vehicle operators increased by $6.4 million. Investment income fell to -$10.9 million while “other” income increased by $0.8 million.
Road Fund collections for FY22 were below the official consensus forecast of $4.7 million, or 0.3%, as shown in Table 4. This shortfall will not lead to reductions in expenditure as the General Assembly did not allocate the full estimated revenue of the Road Fund.
Four of the seven planned accounts for the Road Fund were above estimated levels and the fund as a whole was below the estimate of $4.7 million. Motor vehicle use tax revenue was $9.4 million above estimate, while motor fuel revenue was $13.7 million below estimate. All other accounts, taken together, were $500,000 below expected levels.
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